TRENTON-
Attorney General Anne Milgram and Criminal
Justice Director Deborah L. Gramiccioni
announced that a total of seven people and
11 corporations have been charged in two
separate indictments for their alleged roles
in two workers’ compensation scams
that netted as much as $1.5 million for
the defendants.

The
indictments allege that the defendants lied
on insurance applications and failed to
remit insurance premiums to the insurance
companies, instead keeping the money for
themselves. It is also charged that the
defendants laundered money so that the scheme
would go undetected. As a result, many people
were allegedly left without workers’
compensation insurance.

Q-Town and TJAX, in Audubon, were owned
by Sciarra and operated by Brown. Sciarra,
Magee and Maconaghy were the owners and
operators of Bay Enterprises, located in
Marlton. Maconaghy operated 3D Assurance
in Audubon. Brown, Maconaghy and Griffith
are all currently-licensed insurance brokers.
All the defendants except Griffith owned
and/or were involved in the operation of
professional employer organizations (PEOs).
A PEO is a business organization primarily
engaged in providing human resources and
personnel functions to client companies.

The
indictment alleges that between June 2003
and September 2007, Sciarra, a former licensed
insurance producer, and his co-defendants
fraudulently avoided premium payments for
workers’ compensation insurance they
obtained for clients. The defendants allegedly
submitted falsified applications for workers’
compensation insurance by misrepresenting
and omitting information in the applications.
These misrepresentations included understating
the number of employees leased, the kind
of work those employees did and the number
of past injury claims involving the employers,
all factors that are relevant to determining
the cost of workers’ compensation
insurance. The defendants also are charged
with failing to turn over money that was
provided by clients of the PEOs to pay for
insurance premiums.

The
indictment alleges that as a result of the
misrepresentations, the defendants committed
insurance fraud by avoiding payment of $304,244
in workers’ compensation insurance
premiums. The defendants are also charged
with misappropriating as much as $745,207
from clients of the PEOs by failing to remit
the money to the insurance companies.

A second state grand jury indictment returned
on June 20, 2007 was unsealed yesterday.
The indictment charged Sciarra, Brown, and
Paul Hopkins, 58, of Marlton, with conspiracy
to commit racketeering, racketeering, conspiracy,
theft by failure to make required disposition
of property received, theft of services,
misconduct by a corporate official and financial
facilitation of criminal activity. Sciarra
and Brown were additionally charged with
workers’ compensation insurance fraud,
and Sciarra alone was charged with failure
to carry workers’ compensation insurance.
Hopkins’s wife, Adrienne Hopkins,
48, of Marlton, was charged with conspiracy
to commit racketeering, racketeering, conspiracy,
misconduct by a corporate official, and
financial facilitation of criminal activity.

The
unsealed indictment alleges that Sciarra,
Brown, and the Hopkinses fraudulently obtained
workers’ compensation insurance through
AJAX, AJEX, and the other PEOs between 1996
and June 2002. The unsealed indictment involves
allegations that the named defendants falsified
workers’ compensation insurance applications,
evaded payment of premiums, and failed to
remit money to insurers, which had been
provided by clients to pay for insurance
premiums.

The
indictment also charges Sciarra and one
of his PEOs, AJEX, with failing to provide
workers’ compensation insurance for
the employees of clients. Sciarra and AJEX
allegedly issued falsified certificates
of insurance to their clients to conceal
that no insurance had been obtained. The
defendants also allegedly falsified and
withheld material information from auditors
to evade full payment of premiums. It is
charged that the defendants even submitted
workers’ compensation claims with
false or misleading information in an effort
to get insurance carriers to pay benefits.
The defendants allegedly engaged in money
laundering to conceal as much as $500,000
of the proceeds obtained from those alleged
criminal activities.

Detective
Andrea Hayes, Analyst Terri Drumm and Deputy
Attorney General Peter W. Lee were assigned
to the investigation. Deputy Attorney General
Lee presented the case to the state grand
jury. The Department of Banking and Insurance
routinely assists the Office of the Insurance
Fraud Prosecutor with the investigation
and prosecution of licensed insurance agents.
Prosecutor Brown thanked the Department
of Banking and Insurance for their assistance.

The
indictments are merely accusations and the
defendants are presumed innocent until proven
guilty. Second-degree crimes carry a maximum
sentence of 10 years in state prison and
a criminal fine of $150,000, while crimes
of the fourth degree carry a maximum sentence
of 18 months in state prison and a criminal
fine of $10,000. The defendants may also
face civil insurance fraud fines.